By restraining, either by high duties or by absolute prohibitions, the importation
of such goods from foreign countries as can be produced at home, the monopoly
of the home market is more or less secured to the domestic industry employed
in producing them. Thus the prohibition of importing either live cattle or
salt provisions from foreign countries secures to the graziers of Great Britain
the monopoly of the home market for butcher's meat. The high duties upon the
importation of corn, which in times of moderate plenty amount to a prohibition,
give a like advantage to the growers of that commodity. The prohibition of
the importation of foreign woollens is equally favourable to the woollen manufacturers.
The silk manufacture, though altogether employed upon foreign materials, has
lately obtained the same advantage. The linen manufacture has not yet obtained
it, but is making great strides towards it. Many other sorts of manufacturers
have, in the same manner, obtained in Great Britain, either altogether or very
nearly, a monopoly against their countrymen. The variety of goods of which
the importation into Great Britain is prohibited, either absolutely, or under
certain circumstances, greatly exceeds what can easily be suspected by those
who are not
well acquainted with the laws of the customs.
That this monopoly of the home market frequently gives great encouragement
to that particular species of industry which enjoys it, and frequently turns
towards that employment a greater share of both the labour and stock of the
society than would otherwise have gone to it, cannot be doubted. But whether
it tends either to increase the general industry of the society, or to give
it the most advantageous direction, is not, perhaps, altogether so evident.
The general industry of the society never can exceed what the capital of
the society can employ. As the number of workmen that can be kept in employment
by any particular person must bear a certain proportion to his capital, so
the number of those that can be continually employed by all the members of
a great society must bear a certain proportion to the whole capital of that
society, and never can exceed that proportion. No regulation of commerce
can increase the quantity of industry in any society beyond what its capital
can maintain. It can only divert a part of it into a direction into which
it might not otherwise have gone; and it is by no means certain that this
artificial direction is likely to be more advantageous to the society than
that into which it would have gone of its own accord.
Every individual is continually exerting himself to find out the most advantageous
employment for whatever capital he can command. It is his own advantage,
indeed, and not that of the society, which he has in view. But the study
of his own advantage naturally, or rather necessarily, leads him to prefer
that employment which is most advantageous to the society.
First, every individual endeavours to employ his capital as near home as
he can, and consequently as much as he can in the support of domestic industry;
provided always that he can thereby obtain the ordinary, or not a great deal
less than the ordinary profits of stock.
Thus, upon equal or nearly equal profits, every wholesale merchant naturally
prefers the home trade to the foreign trade of consumption, and the foreign
trade of consumption to the carrying trade. In the home trade his capital
is never so long out of his sight as it frequently is in the foreign trade
of consumption. He can know better the character and situation of the persons
whom he trusts, and if he should happen to be deceived, he knows better the
laws of the country from which he must seek redress. In the carrying trade,
the capital of the merchant is, as it were, divided between two foreign countries,
and no part of it is ever necessarily brought home, or placed under his own
immediate view and command. The capital which an Amsterdam merchant employs
in carrying corn from Konigsberg to Lisbon, and fruit and wine from Lisbon
to Konigsberg, must generally be the one half of it at Konigsberg and the
other half at Lisbon. No part of it need ever come to Amsterdam. The natural
residence of such a merchant should either be at Konigsberg or Lisbon, and
it can only be some very particular circumstances which can make him prefer
the residence of Amsterdam. The uneasiness, however, which he feels at being
separated so far from his capital generally determines him to bring part
both of the Konigsberg goods which he destines for the market of Lisbon,
and of the Lisbon goods which he destines for that of Konigsberg, to Amsterdam:
and though this necessarily subjects him to a double charge of loading and
unloading, as well as to the payment of some duties and customs, yet for
the sake of having some part of his capital always under his own view and
command, he willingly submits to this extraordinary charge; and it is in
this manner that every country which has any considerable share of the carrying
trade becomes always the emporium, or general market, for the goods of all
the different countries whose trade it carries on. The merchant, in order
to save a second loading and unloading, endeavours always to sell in the
home market as much of the goods of all those different countries as he can,
and thus, so far as he can, to convert his carrying trade into a foreign
trade of consumption. A merchant, in the same manner, who is engaged in the
foreign trade of consumption, when he collects goods for foreign markets,
will always be glad, upon equal or nearly equal profits, to sell as great
a part of them at home as he can. He saves himself the risk and trouble of
exportation, when, so far as he can, he thus converts his foreign trade of
consumption into a home trade. Home is in this manner the centre, if I may
say so, round which the capitals of the inhabitants of every country are
continually circulating, and towards which they are always tending, though
by particular causes they may sometimes be driven off and repelled from it
towards more distant employments. But a capital employed in the home trade,
it has already been shown, necessarily puts into motion a greater quantity
of domestic industry, and gives revenue and employment to a greater number
of the inhabitants of the country, than an equal capital employed in the
foreign trade of consumption: and one employed in the foreign trade of consumption
has the same advantage over an equal capital employed in the carrying trade.
Upon equal, or only nearly equal profits, therefore, every individual naturally
inclines to employ his capital in the manner in which it is likely to afford
the greatest support to domestic industry, and to give revenue and employment
to the greatest number of people of his own country.
Secondly, every individual who employs his capital in the support of domestic
industry, necessarily endeavours so to direct that industry that its produce
may be of the greatest possible value.
The produce of industry is what it adds to the subject or materials upon
which it is employed. In proportion as the value of this produce is great
or small, so will likewise be the profits of the employer. But it is only
for the sake of profit that any man employs a capital in the support of industry;
and he will always, therefore, endeavour to employ it in the support of that
industry of which the produce is likely to be of the greatest value, or to
exchange for the greatest quantity either of money or of other goods.
But the annual revenue of every society is always precisely equal to the
exchangeable value of the whole annual produce of its industry, or rather
is precisely the same thing with that exchangeable value. As every individual,
therefore, endeavours as much as he can both to employ his capital in the
support of domestic industry, and so to direct that industry that its produce
may be of the greatest value; every individual necessarily labours to render
the annual revenue of the society as great as he can. He generally, indeed,
neither intends to promote the public interest, nor knows how much he is
promoting it. By preferring the support of domestic to that of foreign industry,
he intends only his own security; and by directing that industry in such
a manner as its produce may be of the greatest value, he intends only his
own gain, and he is in this, as in many other cases, led by an invisible hand
to promote an end which was no part of his intention. Nor is it always the
worse for the society that it was no part of it. By pursuing his own interest
he frequently promotes that of the society more effectually than when he
really intends to promote it. I have never known much good done by those
who affected to trade for the public good. It is an affectation, indeed,
not very common among merchants, and very few words need be employed in dissuading
them from it.
What is the species of domestic industry which his capital can employ, and
of which the produce is likely to be of the greatest value, every individual,
it is evident, can, in his local situation, judge much better than any statesman
or lawgiver can do for him. The statesman who should attempt to direct private
people in what manner they ought to employ their capitals would not only
load himself with a most unnecessary attention, but assume an authority which
could safely be trusted, not only to no single person, but to no council
or senate whatever, and which would nowhere be so dangerous as in the hands
of a man who had folly and presumption enough to fancy himself fit to exercise
it.
To give the monopoly of the home market to the produce of domestic industry,
in any particular art or manufacture, is in some measure to direct private
people in what manner they ought to employ their capitals, and must, in almost
all cases, be either a useless or a hurtful regulation. If the produce of
domestic can be brought there as cheap as that of foreign industry, the regulation
is evidently useless. If it cannot, it must generally be hurtful. It is the
maxim of every prudent master of a family never to attempt to make at home
what it will cost him more to make than to buy. The tailor does not attempt
to make his own shoes, but buys them of the shoemaker. The shoemaker does
not attempt to make his own clothes, but employs a tailor. The farmer attempts
to make neither the one nor the other, but employs those different artificers.
All of them find it for their interest to employ their whole industry in
a way in which they have some advantage over their neighbours, and to purchase
with a part of its produce, or what is the same thing, with the price of
a part of it, whatever else they have occasion for.
What is prudence in the conduct of every private family can scarce be folly
in that of a great kingdom. If a foreign country can supply us with a commodity
cheaper than we ourselves can make it, better buy it of them with some part
of the produce of our own industry employed in a way in which we have some
advantage. The general industry of the country, being always in proportion
to the capital which employs it, will not thereby be diminished, no more
than that of the above-mentioned artificers; but only left to find out the
way in which it can be employed with the greatest advantage. It is certainly
not employed to the greatest advantage when it is thus directed towards an
object which it can buy cheaper than it can make. The value of its annual
produce is certainly more or less diminished when it is thus turned away
from producing commodities evidently of more value than the commodity which
it is directed to produce. According to the supposition, that commodity could
be purchased from foreign countries cheaper than it can be made at home.
It could, therefore, have been purchased with a part only of the commodities,
or, what is the same thing, with a part only of the price of the commodities,
which the industry employed by an equal capital would have produced at home,
had it been left to follow its natural course. The industry of the country,
therefore, is thus turned away from a more to a less advantageous employment,
and the exchangeable value of its annual produce, instead of being increased,
according to the intention of the lawgiver, must necessarily be diminished
by every such regulation.
By means of such regulations, indeed, a particular manufacture may sometimes
be acquired sooner than it could have been otherwise, and after a certain
time may be made at home as cheap or cheaper than in the foreign country.
But though the industry of the society may be thus carried with advantage
into a particular channel sooner than it could have been otherwise, it will
by no means follow that the sum total, either of its industry, or of its
revenue, can ever be augmented by any such regulation. The industry of the
society can augment only in proportion as its capital augments, and its capital
can augment only in proportion to what can be gradually saved out of its
revenue. But the immediate effect of every such regulation is to diminish
its revenue, and what diminishes its revenue is certainly not very likely
to augment its capital faster than it would have augmented of its own accord
had both capital and industry been left to find out their natural employments.
Though for want of such regulations the society should never acquire the
proposed manufacture, it would not, upon that account, necessarily be the
poorer in any one period of its duration. In every period of its duration
its whole capital and industry might still have been employed, though upon
different objects, in the manner that was most advantageous at the time.
In every period its revenue might have been the greatest which its capital
could afford, and both capital and revenue might have been augmented with
the greatest possible rapidity.
The natural advantages which one country has over another in producing particular
commodities are sometimes so great that it is acknowledged by all the world
to be in vain to struggle with them. By means of glasses, hotbeds, and hot
walls, very good grapes can be raised in Scotland, and very good wine too
can be made of them at about thirty times the expense for which at least
equally good can be brought from foreign countries. Would it be a reasonable
law to prohibit the importation of all foreign wines merely to encourage
the making of claret and burgundy in Scotland? But if there would be a manifest
absurdity in turning towards any employment thirty times more of the capital
and industry of the country than would be necessary to purchase from foreign
countries an equal quantity of the commodities wanted, there must be an absurdity,
though not altogether so glaring, yet exactly of the same kind, in turning
towards any such employment a thirtieth, or even a three-hundredth part more
of either. Whether the advantages which one country has over another be natural
or acquired is in this respect of no consequence. As long as the one country
has those advantages, and the other wants them, it will always be more advantageous
for the latter rather to buy of the former than to make. It is an acquired
advantage only, which one artificer has over his neighbour, who exercises
another trade; and yet they both find it more advantageous to buy of one
another than to make what does not belong to their particular trades.
Merchants and manufacturers are the people who derive the greatest advantage
from this monopoly of the home market. The prohibition of the importation
of foreign cattle, and of salt provisions, together with the high duties
upon foreign corn, which in times of moderate plenty amount to a prohibition,
are not near so advantageous to the graziers and farmers of Great Britain
as other regulations of the same kind are to its merchants and manufacturers.
Manufactures, those of the finer kind especially, are more easily transported
from one country to another than corn or cattle. It is in the fetching and
carrying manufactures, accordingly, that foreign trade is chiefly employed.
In manufactures, a very small advantage will enable foreigners to undersell
our own workmen, even in the home market. It will require a very great one
to enable them to do so in the rude produce of the soil. If the free importation
of foreign manufactures were permitted, several of the home manufactures
would probably suffer, and some of them, perhaps, go to ruin altogether,
and a considerable part of the stock and industry at present employed in
them would be forced to find out some other employment. But the freest importation
of the rude produce of the soil could have no such effect upon the agriculture
of the country.
If the importation of foreign cattle, for example, were made ever so free,
so few could be imported that the grazing trade of Great Britain could be
little affected by it. Live cattle are, perhaps, the only commodity of which
the transportation is more expensive by sea than by land. By land they carry
themselves to market. By sea, not only the cattle, but their food and their
water too, must be carried at no small expense and inconveniency. The short
sea between Ireland and Great Britain, indeed, renders the importation of
Irish cattle more easy. But though the free importation of them, which was
lately permitted only for a limited time, were rendered perpetual, it could
have no considerable effect upon the interest of the graziers of Great Britain.
Those parts of Great Britain which border upon the Irish Sea are all grazing
countries. Irish cattle could never be imported for their use, but must be
driven through those very extensive countries, at no small expense and inconveniency,
before they could arrive at their proper market. Fat cattle could not be
driven so far. Lean cattle, therefore, only could be imported, and such importation
could interfere, not with the interest of the feeding or fattening countries,
to which, by reducing the price of lean cattle, it would rather be advantageous,
but with that of the breeding countries only. The small number of Irish cattle
imported since their importation was permitted, together with the good price
at which lean cattle still continue to sell, seem to demonstrate that even
the breeding countries of Great Britain are never likely to be much affected
by the free importation of Irish cattle. The common people of Ireland, indeed,
are said to have sometimes opposed with violence the exportation of their
cattle. But if the exporters had found any great advantage in continuing
the trade, they could easily, when the law was on their side, have conquered
this mobbish opposition.
Feeding and fattening countries, besides, must always be highly improved,
whereas breeding countries are generally uncultivated. The high price of
lean cattle, by augmenting the value of uncultivated land, is like a bounty
against improvement. To any country which was highly improved throughout,
it would be more advantageous to import its lean cattle than to breed them.
The province of Holland, accordingly, is said to follow this maxim at present.
The mountains of Scotland, Wales, and Northumberland, indeed, are countries
not capable of much improvement, and seem destined by nature to be the breeding
countries of Great Britain. The freest importation of foreign cattle could
have no other effect than to hinder those breeding countries from taking
advantage of the increasing population and improvement of the rest of the
kingdom, from raising their price to an exorbitant height, and from laying
a real tax upon all the more improved and cultivated parts of the country.
The freest importation of salt provisions, in the same manner, could have
as little effect upon the interest of the graziers of Great Britain as that
of live cattle. Salt provisions are not only a very bulky commodity, but
when compared with fresh meat, they are a commodity both of worse quality,
and as they cost more labour and expense, of higher price. They could never,
therefore, come into competition with the fresh meat, though they might with
the salt provisions of the country. They might be used for victualling ships
for distant voyages and such like uses, but could never make any considerable
part of the food of the people. The small quantity of salt provisions imported
from Ireland since their importation was rendered free is an experimental
proof that our graziers have nothing to apprehend from it. It does not appear
that the price of butcher's meat has ever been sensibly affected by it.
Even the free importation of foreign corn could very little affect the interest
of the farmers of Great Britain. Corn is a much more bulky commodity than
butcher's meat. A pound of wheat at a penny is as dear as a pound of butcher's
meat at fourpence. The small quantity of foreign corn imported even in times
of the greatest scarcity may satisfy our farmers that they can have nothing
to fear from the freest importation. The average quantity imported, one year
with another, amounts only, according to the very well informed author of
the tracts upon the corn trade, to twenty-three thousand seven hundred and
twenty-eight quarters of all sorts of grain, and does not exceed the five
hundred and seventy-first part of the annual consumption. But as the bounty
upon corn occasions a greater exportation in years of plenty, so it must
of consequence occasion a greater importation in years of scarcity than in
the actual state of tillage would otherwise take place. By means of it the
plenty of one year does not compensate the scarcity of another, and as the
average quantity exported is necessarily augmented by it, so must likewise,
in the actual state of tillage, the average quantity imported. If there were
no bounty, as less corn would be exported, so it is probable that, one year
with another, less would be imported than at present. The corn-merchants,
the fetchers and carriers of corn between Great Britain and foreign countries
would have much less employment, and might suffer considerably; but the country
gentlemen and farmers could suffer very little. It is in the corn merchants
accordingly, rather than in the country gentlemen and farmers, that I have
observed the greatest anxiety for the renewal and continuation of the bounty.
Country gentlemen and farmers are, to their great honour, of all people,
the least subject to the wretched spirit of monopoly. The undertaker of a
great manufactory is sometimes alarmed if another work of the same kind is
established within twenty miles of him. The Dutch undertaker of the woollen
manufacture at Abbeville stipulated that no work of the same kind should
be established within thirty leagues of that city. Farmers and country gentlemen,
on the contrary, are generally disposed rather to promote than to obstruct
the cultivation and improvement of their neighbours' farms and estates. They
have no secrets such as those of the greater part of manufacturers, but are
generally rather fond of communicating to their neighbours and of extending
as far as possible any new practice which they have found to be advantageous.
Pius Questus, says old Cato, stabilissimusque, minimeque invidiosus; minimeque
male cogitantes sunt, qui in eo studio occupati sunt. Country gentlemen and
farmers, dispersed in different parts of the country, cannot so easily combine
as merchants and manufacturers, who, being collected into towns, and accustomed
to that exclusive corporation spirit which prevails in them, naturally endeavour
to obtain against all their countrymen the same exclusive privilege which
they generally possess against the inhabitants of their respective towns.
They accordingly seem to have been the original inventors of those restraints
upon the importation of foreign goods which secure to them the monopoly of
the home market. It was probably in imitation of them, and to put themselves
upon a level with those who, they found, were disposed to oppress them, that
the country gentlemen and farmers of Great Britain in so far forgot the generosity
which is natural to their station as to demand the exclusive privilege of
supplying their countrymen with corn and butcher's meat. They did not perhaps
take time to consider how much less their interest could be affected by the
freedom of trade than that of the people whose example they followed.
To prohibit by a perpetual law the importation of foreign corn and cattle
is in reality to enact that the population and industry of the country shall
at no time exceed what the rude produce of its own soil can maintain.
There seem, however, to be two cases in which it will generally be advantageous
to lay some burden upon foreign for the encouragement of domestic industry.
The first is, when some particular sort of industry is necessary for the
defence of the country. The defence of Great Britain, for example, depends
very much upon the number of its sailors and shipping. The Act of Navigation,
therefore, very properly endeavours to give the sailors and shipping of Great
Britain the monopoly of the trade of their own country in some cases by absolute
prohibitions and in others by heavy burdens upon the shipping of foreign
countries. The following are the principal dispositions of this Act.
First, all ships, of which the owners and three-fourths of the mariners
are not British subjects, are prohibited, upon pain of forfeiting ship and
cargo, from trading to the British settlements and plantations, or from being
employed in the coasting trade of Great Britain.
Secondly, a great variety of the most bulky articles of importation can
be brought into Great Britain only, either in such ships as are above described,
or in ships of the country where those goods are purchased, and of which
the owners, masters, and three-fourths of the mariners are of that particular
country; and when imported even in ships of this latter kind, they are subject
to double aliens' duty. If imported in ships of any other country, the penalty
is forfeiture of ship and goods. When this act was made, the Dutch were,
what they still are, the great carriers of Europe, and by this regulation
they were entirely excluded from being the carriers to Great Britain, or
from importing to us the goods of any other European country.
Thirdly, a great variety of the most bulky articles of importation are prohibited
from being imported, even in British ships, from any country but that in
which they are produced, under pains of forfeiting ship and cargo. This regulation,
too, was probably intended against the Dutch. Holland was then, as now, the
great emporium for all European goods, and by this regulation British ships
were hindered from loading in Holland the goods of any other European country.
Fourthly, salt fish of all kinds, whale-fins, whale-bone, oil, and blubber,
not caught by and cured on board British vessels, when imported into Great
Britain, are subjected to double aliens' duty. The Dutch, as they are they
the principal, were then the only fishers in Europe that attempted to supply
foreign nations with fish. By this regulation, a very heavy burden was laid
upon their supplying Great Britain.
When the Act of Navigation was made, though England and Holland were not
actually at war, the most violent animosity subsisted between the two nations.
It had begun during the government of the Long Parliament, which first framed
this act, and it broke out soon after in the Dutch wars during that of the
Protector and of Charles the Second. It is not impossible, therefore, that
some of the regulations of this famous act may have proceeded from national
animosity. They are as wise, however, as if they had all been dictated by
the most deliberate wisdom. National animosity at that particular time aimed
at the very same object which the most deliberate wisdom would have recommended,
the diminution of the naval power of Holland, the only naval power which
could endanger the security of England.
The Act of Navigation is not favourable to foreign commerce, or to the growth
of that opulence which can arise from it. The interest of a nation in its
commercial relations to foreign nations is, like that of a merchant with
regard to the different people with whom he deals, to buy as cheap and to
sell as dear as possible. But it will be most likely to buy cheap, when by
the most perfect freedom of trade it encourages all nations to bring to it
the goods which it has occasion to purchase; and, for the same reason, it
will be most likely to sell dear, when its markets are thus filled with the
greatest number of buyers. The Act of Navigation, it is true, lays no burden
upon foreign ships that come to export the produce of British industry. Even
the ancient aliens' duty, which used to be paid upon all goods exported as
well as imported, has, by several subsequent acts, been taken off from the
greater part of the articles of exportation. But if foreigners, either by
prohibitions or high duties, are hindered from coming to sell, they cannot
always afford to come to buy; because coming without a cargo, they must lose
the freight from their own country to Great Britain. By diminishing the number
of sellers, therefore, we necessarily diminish that of buyers, and are thus
likely not only to buy foreign goods dearer, but to sell our own cheaper,
than if there was a more perfect freedom of trade. As defence, however it
is of much more importance than opulence, the Act of Navigation is, perhaps,
the wisest of all the commercial regulations of England.
The second case, in which it will generally be advantageous to lay some
burden upon foreign for the encouragement of domestic industry is, when some
tax is imposed at home upon the produce of the latter. In this case, it seems
reasonable that an equal tax should be imposed upon the like produce of the
former. This would not give the monopoly of the home market to domestic industry,
nor turn towards a particular employment a greater share of the stock and
labour of the country than what would naturally go to it. It would only hinder
any part of what would naturally go to it from being turned away by the tax
into a less natural direction, and would leave the competition between foreign
and domestic industry, after the tax, as nearly as possible upon the same
footing as before it. In Great Britain, when any such tax is laid upon the
produce of domestic industry, it is usual at the same time, in order to stop
the clamorous complaints of our merchants and manufacturers that they will
be undersold at home, to lay a much heavier duty upon the importation of
all foreign goods of the same kind.
This second limitation of the freedom of trade according to some people
should, upon some occasions, be extended much farther than to the precise
foreign commodities which could come into competition with those which had
been taxed at home. When the necessaries of life have been taxed any country,
it becomes proper, they pretend, to tax not only the like necessaries of
life imported from other countries, but all sorts of foreign goods which
can come into competition with anything that is the produce of domestic industry.
Subsistence, they say, becomes necessarily dearer in consequence of such
taxes; and the price of labour must always rise with the price of the labourers'
subsistence. Every commodity, therefore, which is the produce of domestic
industry, though not immediately taxed itself, becomes dearer in consequence
of such taxes, because the labour which produces it becomes so. Such taxes,
therefore, are really equivalent, they say, to a tax upon every particular
commodity produced at home. In order to put domestic upon the same footing
with foreign industry, therefore, it becomes necessary, they think, to lay
some duty upon every foreign commodity equal to this enhancement of the price
of the home commodities with which it can come into competition.
Whether taxes upon the necessaries of life, such as those in Great Britain
upon soap, salt, leather, candles, etc., necessarily raise the price of labour,
and consequently that of all other commodities, I shall consider hereafter
when I come to treat of taxes. Supposing, however, in the meantime, that
they have this effect, and they have it undoubtedly, this general enhancement
of the price of all commodities, in consequence of that of labour, is a case
which differs in the two following respects from that of a particular commodity
of which the price was enhanced by a particular tax immediately imposed upon
it.
First, it might always be known with great exactness how far the price of
such a commodity could be enhanced by such a tax: but how far the general
enhancement of the price of labour might affect that of every different commodity
about which labour was employed could never be known with any tolerable exactness.
It would be impossible, therefore, to proportion with any tolerable exactness
the tax upon every foreign to this enhancement of the price of every home
commodity.
Secondly, taxes upon the necessaries of life have nearly the same effect
upon the circumstances of the people as a poor soil and a bad climate. Provisions
are thereby rendered dearer in the same manner as if it required extraordinary
labour and expense to raise them. As in the natural scarcity arising from
soil and climate it would be absurd to direct the people in what manner they
ought to employ their capitals and industry, so is it likewise in the artificial
scarcity arising from such taxes. To be left to accommodate, as well as they
could, their industry to their situation, and to find out those employments
in which, notwithstanding their unfavourable circumstances, they might have
some advantage either in the home or in the foreign market, is what in both
cases would evidently be most for their advantage. To lay a new tax upon
them, because they are already overburdened with taxes, and because they
already pay too dear for the necessaries of life, to make them likewise pay
too dear for the greater part of other commodities, is certainly a most absurd
way of making amends.
Such taxes, when they have grown up to a certain height, are a curse equal
to the barrenness of the earth and the inclemency of the heavens; and yet
it is in the richest and most industrious countries that they have been most
generally imposed. No other countries could support so great a disorder.
As the strongest bodies only can live and enjoy health under an unwholesome
regimen, so the nations only that in every sort of industry have the greatest
natural and acquired advantages can subsist and prosper under such taxes.
Holland is the country in Europe in which they abound most, and which from
peculiar circumstances continues to prosper, not by means of them, as has
been most absurdly supposed, but in spite of them.
As there are two cases in which it will generally be advantageous to lay
some burden upon foreign for the encouragement of domestic industry, so there
are two others in which it may sometimes be a matter of deliberation; in
the one, how far it is proper to continue the free importation of certain
foreign goods; and in the other, how far, or in what manner, it may be proper
to restore that free importation after it has been for some time interrupted.
The case in which it may sometimes be a matter of deliberation how far it
is proper to continue the free importation of certain foreign goods is, when
some foreign nation restrains by high duties or prohibitions the importation
of some of our manufactures into their country. Revenge in this case naturally
dictates retaliation, and that we should impose the like duties and prohibitions
upon the importation of some or all of their manufactures into ours. Nations,
accordingly, seldom fail to retaliate in this manner. The French have been
particularly forward to favour their own manufactures by restraining the
importation of such foreign goods as could come into competition with them.
In this consisted a great part of the policy of Mr. Colbert, who, notwithstanding
his great abilities, seems in this case to have been imposed upon by the
sophistry of merchants and manufacturers, who are always demanding a monopoly
against their countrymen. It is at present the opinion of the most intelligent
men in France that his operations of this kind have not been beneficial to
his country. That minister, by the tariff of 1667, imposed very high duties
upon a great number of foreign manufactures. Upon his refusing to moderate
them in favour of the Dutch, they in 1671 prohibited the importation of the
wines, brandies, and manufactures of France. The war of 1672 seems to have
been in part occasioned by this commercial dispute. The peace of Nimeguen
put an end to it in 1678 by moderating some of those duties in favour of
the Dutch, who in consequence took off their prohibition. It was about the
same time that the French and English began mutually to oppress each other's
industry by the like duties and prohibitions, of which the French, however,
seem to have set the first example. The spirit of hostility which has subsisted
between the two nations ever since has hitherto hindered them from being
moderated on either side. In 1697 the English prohibited the importation
of bonelace, the manufacture of Flanders. The government of that country,
at that time under the dominion of Spain, prohibited in return the importation
of English woollens. In 1700, the prohibition of importing bonelace into
England was taken off upon condition that the importance of English woollens
into Flanders should be put on the same footing as before.
There may be good policy in retaliations of this kind, when there is a probability
that they will procure the repeal of the high duties or prohibitions complained
of. The recovery of a great foreign market will generally more than compensate
the transitory inconveniency of paying dearer during a short time for some
sorts of goods. To judge whether such retaliations are likely to produce
such an effect does not, perhaps, belong so much to the science of a legislator,
whose deliberations ought to be governed by general principles which are
always the same, as to the skill of that insidious and crafty animal, vulgarly
called a statesman or politician, whose councils are directed by the momentary
fluctuations of affairs. When there is no probability that any such repeal
can be procured, it seems a bad method of compensating the injury done to
certain classes of our people to do another injury ourselves, not only to
those classes, but to almost all the other classes of them. When our neighbours
prohibit some manufacture of ours, we generally prohibit, not only the same,
for that alone would seldom affect them considerably, but some other manufacture
of theirs. This may no doubt give encouragement to some particular class
of workmen among ourselves, and by excluding some of their rivals, may enable
them to raise their price in the home market. Those workmen, however, who
suffered by our neighbours' prohibition will not be benefited by ours. On
the contrary, they and almost all the other classes of our citizens will
thereby be obliged to pay dearer than before for certain goods. Every such
law, therefore, imposes a real tax upon the whole country, not in favour
of that particular class of workmen who were injured by our neighbours' prohibition,
but of some other class.
The case in which it may sometimes be a matter of deliberation, how far,
or in what manner, it is proper to restore the free importation of foreign
goods, after it has been for some time interrupted, is, when particular manufactures,
by means of high duties or prohibitions upon all foreign goods which can
come into competition with them, have been so far extended as to employ a
great multitude of hands. Humanity may in this case require that the freedom
of trade should be restored only by slow gradations, and with a good deal
of reserve and circumspection. Were those high duties and prohibitions taken
away all at once, cheaper foreign goods of the same kind might be poured
so fast into the home market as to deprive all at once many thousands of
our people of their ordinary employment and means of subsistence. The disorder
which this would occasion might no doubt be very considerable. It would in
all probability, however, be much less than is commonly imagined, for the
two following reasons:-
First, all those manufactures, of which any part is commonly exported to
other European countries without a bounty, could be very little affected
by the freest importation of foreign goods. Such manufactures must be sold
as cheap abroad as any other foreign goods of the same quality and kind,
and consequently must be sold cheaper at home. They would still, therefore,
keep possession of the home market, and though a capricious man of fashion
might sometimes prefer foreign wares, merely because they were foreign, to
cheaper and better goods of the same kind that were made at home, this folly
could, from the nature of things, extend to so few that it could make no
sensible impression upon the general employment of the people. But a great
part of all the different branches of our woollen manufacture, of our tanned
leather, and of our hardware, are annually exported to other European countries
without any bounty, and these are the manufactures which employ the greatest
number of hands. The silk, perhaps, is the manufacture which would suffer
the most by this freedom of trade, and after it the linen, though the latter
much less than the former.
Secondly, though a great number of people should, by thus restoring the
freedom of trade, be thrown all at once out of their ordinary employment
and common method of subsistence, it would by no means follow that they would
thereby be deprived either of employment or subsistence. By the reduction
of the army and navy at the end of the late war, more than a hundred thousand
soldiers and seamen, a number equal to what is employed in the greatest manufactures,
were all at once thrown out of their ordinary employment; but, though they
no doubt suffered some inconveniency, they were not thereby deprived of all
employment and subsistence. The greater part of the seamen, it is probable,
gradually betook themselves to the merchant-service as they could find occasion,
and in the meantime both they and the soldiers were absorbed in the great
mass of the people, and employed in a great variety of occupations. Not only
no great convulsion, but no sensible disorder arose from so great a change
in the situation of more than a hundred thousand men, all accustomed to the
use of arms, and many of them to rapine and plunder. The number of vagrants
was scarce anywhere sensibly increased by it, even the wages of labour were
not reduced by it in any occupation, so far as I have been able to learn,
except in that of seamen in the merchant service. But if we compare together
the habits of a soldier and of any sort of manufacturer, we shall find that
those of the latter do not tend so much to disqualify him from being employed
in a new trade, as those of the former from being employed in any. The manufacturer
has always been accustomed to look for his subsistence from his labour only:
the soldier to expect it from his pay. Application and industry have been
familiar to the one; idleness and dissipation to the other. But it is surely
much easier to change the direction of industry from one sort of labour to
another than to turn idleness and dissipation to any. To the greater part
of manufactures besides, it has already been observed, there are other collateral
manufactures of so similar a nature that a workman can easily transfer his
industry from one of them to another. The greater part of such workmen too
are occasionally employed in country labour. The stock which employed them
in a particular manufacture before will still remain in the country to employ
an equal number of people in some other way. The capital of the country remaining
the same, the demand for labour will likewise be the same, or very nearly
the same, though it may be exerted in different places and for different
occupations. Soldiers and seamen, indeed, when discharged from the king's
service, are at liberty to exercise any trade, within any town or place of
Great Britain or Ireland. Let the same natural liberty of exercising what
species of industry they please, be restored to all his Majesty's subjects,
in the same manner as to soldiers and seamen; that is, break down the exclusive
privileges of corporations, and repeal the Statute of Apprenticeship, both
which are real encroachments upon natural liberty, and add to these the repeal
of the Law of Settlements, so that a poor workman, when thrown out of employment
either in one trade or in one place, may seek for it in another trade or
in another place without the fear either of a prosecution or of a removal,
and neither the public nor the individuals will suffer much more from the
occasional disbanding some particular classes of manufacturers than from
that of soldiers. Our manufacturers have no doubt great merit with their
country, but they cannot have more than those who defend it with their blood,
nor deserve to be treated with more delicacy.
To expect, indeed, that the freedom of trade should ever be entirely restored
in Great Britain is as absurd as to expect that an Oceana or Utopia should
ever be established in it. Not only the prejudices of the public, but what
is much more unconquerable, the private interests of many individuals, irresistibly
oppose it. Were the officers of the army to oppose with the same zeal and
unanimity any reduction in the numbers of forces with which master manufacturers
set themselves against every law that is likely to increase the number of
their rivals in the home market; were the former to animate their soldiers
in the same manner as the latter enflame their workmen to attack with violence
and outrage the proposers of any such regulation, to attempt to reduce the
army would be as dangerous as it has now become to attempt to diminish in
any respect the monopoly which our manufacturers have obtained against us.
This monopoly has so much increased the number of some particular tribes
of them that, like an overgrown standing army, they have become formidable
to the government, and upon many occasions intimidate the legislature. The
Member of Parliament who supports every proposal for strengthening this monopoly
is sure to acquire not only the reputation of understanding trade, but great
popularity and influence with an order of men whose numbers and wealth render
them of great importance. If he opposes them, on the contrary, and still
more if he has authority enough to be able to thwart them, neither the most
acknowledged probity, nor the highest rank, nor the greatest public services
can protect him from the most infamous abuse and detraction, from personal
insults, nor sometimes from real danger, arising from the insolent outrage
of furious and disappointed monopolists.
The undertaker of a great manufacture, who, by the home markets being suddenly
laid open to the competition of foreigners, should be obliged to abandon
his trade, would no doubt suffer very considerably. That part of his capital
which had usually been employed in purchasing materials and in paying his
workmen might, without much difficulty, perhaps, find another employment.
But that part of it which was fixed in workhouses, and in the instruments
of trade, could scarce be disposed of without considerable loss. The equitable
regard, therefore, to his interest requires that changes of this kind should
never be introduced suddenly, but slowly, gradually, and after a very long
warning. The legislature, were it possible that its deliberations could be
always directed, not by the clamorous importunity of partial interests, but
by an extensive view of the general good, ought upon this very account, perhaps,
to be particularly careful neither to establish any new monopolies of this
kind, nor to extend further those which are already established. Every such
regulation introduces some degree of real disorder into the constitution
of the state, which it will be difficult afterwards to cure without occasioning
another disorder.
How far it may be proper to impose taxes upon the importation of foreign
goods, in order not to prevent their importation but to raise a revenue for
government, I shall consider hereafter when I come to treat of taxes. Taxes
imposed with a view to prevent, or even to diminish importation, are evidently
as destructive of the revenue of the customs as of the freedom of trade.
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